X Ltd. is a taxi operator. Each taxi cost to company 4,00,000 and has a useful life of 3 years. Thetaxi's operating cost for each of 3 years and salvage value at the end of year is as follows:Year 2Year 3Year 11,80,0002,10,0002,38,000* 2,80,0002,30,0001,68,000Operating CostResale ValueYou are required to determine the optimal replacement period of taxi if cost of capital of X Ltd. is10%.

Cost of Capital -A project's cost of capital (COC) is the amount incurred when a company has to…

X Ltd. is a taxi operator. Each taxi cost to company 4,00,000 and has a useful life taxi's operating cost for each of 3 years and salvage value at the end of year is as f Year 1 Year 2 Y 1,80,000 ₹2. * 2,80,000 1, Operating Cost Resale Value 2,10,000 2,30,000 You are required to determine the optimal replacement period of taxi if cost of cap 10%.

X Ltd. is a taxi operator. Each taxi cost to company 4,00,000 and has a useful life taxi's operating cost for each of 3 years and salvage value at the end of year is as f Year 1 Year 2 Y 1,80,000 ₹2. * 2,80,000 1, Operating Cost Resale Value 2,10,000 2,30,000 You are required to determine the optimal replacement period of taxi if cost of cap 10%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

X Ltd. is a taxi operator. Each taxi cost to company 4,00,000 and has a useful life of 3 years. The
taxi's operating cost for each of 3 years and salvage value at the end of year is as follows:
Year 2
Year 3
Year 1
1,80,000
2,10,000
2,38,000
* 2,80,000
2,30,000
1,68,000
Operating Cost
Resale Value
You are required to determine the optimal replacement period of taxi if cost of capital of X Ltd. is
10%.

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